Asset Purchase Agreement

ASSET PURCHASE AGREEMENT


between


PAPERCLIP SOFTWARE, INC.


and


ACCESS SOLUTIONS INTERNATIONAL, INC.


April 15, 1997


TABLE OF CONTENTS


Page


ARTICLE I


Section 1. Purchase and Sale of Assets 2
1.1 Purchased Deposits 2
1.2 Purchased Receivables 2
1.3 Purchased Fixed Assets 2
1.4 Purchased Inventory 2
1.5 Purchased Contracts 2
1.6 Purchased Prepaid Items 3
1.7 Purchased Rights 3
1.8 Purchased Intellectual Property 3
1.9 Excluded Assets 4


ARTICLE II


Section 2. Purchase Price and Payment 4
2.1 Purchase Price 4
2.2 Adjustment to Purchase Price 4
2.3 Payment of Share Portion of Purchase Price 4
2.4 Allocation of Purchase Price 4
2.5 Adjustment of Shares 5


ARTICLE III


Section 3. Closing 5


ARTICLE IV


Section 4. Assumption of Liabilities; Indemnification 5
4.1 Assumption by Purchaser 5
4.2 Indemnification by Seller 5
4.3 Indemnification by Purchaser 6
4.4 Limitations on Indemnity 6
4.5 Indemnification Proceedings 6
4.6 Remedies Not Exclusive 7


ARTICLE V


Section 5. Other Actions 7
5.1 Purchaser to Act as Agent for Seller 7
5.2 Delivery of Property Received after Closing 7
5.3 Purchaser Appointed Attorney for Seller 7
5.4 Execution of Further Documents 8
5.5 Preparation of Form S-4 and the Proxy
Statements; Stockholder Meetings; Other Filings 8
5.6 Employees of Business 10
5.7 Use of Name 11
5.8 Access Board of Directors 11
5.9 Seller Obligations Not to Compete or Disclose 11
5.10 Cooperation in Connection with Stock Transfer
Instructions and Liquidating Distributions 11


ARTICLE VI


Section 6. Representations and Warranties by Seller 12
6.1 Corporate Existence and Qualification of Seller 12
6.2 Seller's Corporate Documents 12
6.3 Authorization of Agreement 12
6.4 No Violation 13
6.5 SEC Documents; Undisclosed Liabilities 13
6.6 Inventory 14
6.7 Accounts Receivable 14
6.8 Material Contracts and Obligations 14
6.9 Title to Real Property; Liens; Condition
of Properties 16
6.10 Licenses 16
6.11 Arms-Length Transactions; Conflicts of Interest 17
6.12 Intellectual Property 17
6.13 Absence of Certain Developments 17
6.14 Undisclosed Liabilities 19
6.15 Litigation; Compliance with Law 19
6.16 Employee Claims Against the Business 19
6.17 Unemployment Insurance Rating 19
6.18 Employee Benefit Plans 20
6.19 Labor Relations 21
6.20 Insurance Policies 21
6.21 Bank Accounts 21
6.22 Capitalization 21
6.23 Investment Representation 22
6.24 Disclosure 22


ARTICLE VII


Section 7. Representations and Warranties by Access 22
7.1 Corporate Existence and Qualification 23
7.2 Access's Corporate Documents 23
7.3 Authorization of Agreement, Etc. 23
7.4 Absence of Certain Developments 24
7.5 Undisclosed Liabilities 24
7.6 Litigation; Compliance with Law 24
7.7 Capitalization; Status of Access Common Shares 24
7.8 SEC Filings 25
7.9 Information Supplied by Access 25


ARTICLE VIII


Section 8. Conduct Prior to Closing 26
8.1 Carry On in Ordinary Course 26
8.2 No General Increases 26
8.3 Contracts and Commitments 26
8.4 Dispositions and Sale of Purchased Assets 26
8.5 Preservation of Organization 26
8.6 No Default 26
8.7 Compliance with Laws 27
8.8 Operation of Business 27
8.9 Consents 27
8.10 Advisement of Changes 27
8.11 No Solicitation 27
8.12 No Delaying Transactions 28
8.13 Lock-Up Agreements 28
8.14 Best Efforts 28


ARTICLE IX


Section 9. Conditions to Obligations of Access 29
9.1 Compliance by Seller; Correctness of
Representations and Warranties of Seller 29
9.2 Certified Resolutions of the Seller 29
9.3 Approval by Purchaser's Counsel 29
9.4 Opinions of Counsel for Seller 29
9.5 Consents of Third Parties 31
9.6 Certificate of Chief Executive Officer of
Seller 31
9.7 Approval of Governmental Authorities 31
9.8 Corporate Authority 31
9.9 Lock-Up Agreement 31
9.10 Approval of Access Stockholders 31
9.11 Form S-4 Effective 31


ARTICLE X


Section 10. Conditions to Obligations of the Seller 32
10.1 Compliance by Access; Correctness of
Representations and Warranties 32
10.2 Certified Resolutions of Access 32
10.3 Approval by Seller's Counsel 32
10.4 Opinion of Edwards & Angell 32
10.5 Certificate of President of Purchaser 33
10.6 Approval of Governmental Authorities 33
10.7 Corporate Authority 34
10.8 Access Purchase Securities 34
10.9 Form S-4 Effective 34


ARTICLE XI


Section 11. Fees and Expenses 34


ARTICLE XII


Section 12. Termination and Effect 35
12.1 Termination of Agreement 35
12.2 Effect of Termination 36


ARTICLE XIII


Section 13. Acknowledgments of Seller 36
13.1 Restricted Securities 36
13.2 Access to Information 37


ARTICLE XIV


Section 14. Broker's Commissions 37


ARTICLE XV


Section 15. Access to Facilities, Properties and Records 37


ARTICLE XVI


Section 16. Survival of Representations 37


ARTICLE XVIII


Section 17. Miscellaneous 38
17.1 Amendment to Agreement; Waivers; Procedure 38
17.2 Binding Effect 38
17.3 Entire Agreement 38
17.4 Headings 39
17.5 Confidential Information; Publicity 39
17.6 Notices 39
17.7 Bulk Sales Law 40
17.8 Counterparts 40
17.9 No Benefit to Others 40
17.10 Governing Law 41
17.11 No Waiver 41
17.12 Severability 41
17.13 Time of Essence 41


ASSET PURCHASE AGREEMENT


ASSET PURCHASE AGREEMENT, made as of April 15th, 1997, by and between PAPERCLIP SOFTWARE, INC., a Delaware corporation (hereinafter called the "Seller"), and ACCESS SOLUTIONS INTERNATIONAL, INC., a Delaware corporation (hereinafter called "Access" or the "Purchaser").


W I T N E S S E T H:


WHEREAS, Seller is engaged in the business of developing and distributing computer software for document management and imaging systems (hereinafter generally called the "Business"); and


WHEREAS, Seller desires to sell, transfer and assign to Purchaser, and Purchaser desires to purchase from Seller, all of the assets of Seller related to the Business, on the terms and conditions hereinafter set forth; and


WHEREAS, as a condition to the willingness of Access to enter into this Agreement, those directors and officers of Seller who are also stockholders of Seller (the "Seller Significant Stockholders") have entered into that certain Stockholder Agreement of even date ("Seller Stockholder Agreement"), which provides, among other things, that each Seller Significant Stockholder will vote the shares of Seller Common Stock which he owns in favor of the approval and adoption of this Agreement and the consummation of the transactions contemplated hereby; and


WHEREAS, as a further condition to the willingness of Access to enter into this Agreement, Seller has entered into that certain Management Agreement of even date (the "Management Agreement") which provides, among other things, that Access will manage the Seller's operations from the date hereof until the consummation of the transactions contemplated hereby or the earlier termination of this Agreement; and


WHEREAS, following such purchase and sale, Seller intends to liquidate and dissolve as a corporation and distribute the Access Purchase Securities (as defined below) to the shareholders of Seller.


NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:


ARTICLE I


Section 1. Purchase and Sale of Assets.


Subject to the terms and conditions set forth in this Agreement, Seller hereby agrees to sell, transfer, assign and deliver to Purchaser, and Purchaser hereby agrees to purchase from Seller, as of the Closing Date (as hereinafter defined), all of the properties and assets of Seller, tangible or intangible, real or personal, belonging to or used in the Business, as and where the same shall exist at the close of business on the Closing Date (hereinafter collectively called the "Purchased Assets"), including, without limitation, the following:


Section 1.1. Purchased Deposits.


All deposits of cash or cash equivalents, certificates of deposit and other cash items relating to the Business or its operations for payroll accounts, utilities or otherwise, including, without limitation, those described on Schedule 1.1 attached hereto (hereinafter called "Purchased Deposits").


Section 1.2. Purchased Receivables.


All trade, accounts, and notes receivable arising out of the sale or lease of goods or the rendition of services by Seller, and all security therefor (hereinafter called the "Purchased Receivables").


Section 1.3. Purchased Fixed Assets.


All machinery, equipment, leasehold improvements, furniture, furnishings, plant and office equipment and other fixed assets used in the Business, including without limitation, the machinery and equipment listed on Schedule 1.3 hereto (hereinafter collectively called the "Purchased Fixed Assets").


Section 1.4. Purchased Inventory.


All inventories, including manufacturing, administrative and other supplies used in the Business (hereinafter called the "Purchased Inventory").


Section 1.5. Purchased Contracts.


All rights under the Contracts (as defined in Section 6.8(a)) of the Seller relating to the Business that are included among the Assumed Liabilities, together with such additions thereto and deletions therefrom as shall have occurred in the ordinary course of business prior to the Closing Date (as defined in Section 3) (hereinafter called the "Purchased Contracts").


Section 1.6. Purchased Prepaid Items.


All credits, prepaid and deferred items and advanced payments such as prepaid rentals, security deposits, taxes (excluding prepaid income taxes and taxes relating to assets other than the Purchased Assets), unbilled charges and deposits relating to the operations of the Business and any other items set forth in Schedule 1.6 attached hereto; excluding from the foregoing, however, prepaid items with respect to which Purchaser shall receive no benefit, such as prepaid insurance (hereinafter called the "Purchased Prepaid Items").


Section 1.7. Purchased Rights.


All data and records relating to the Business, wherever located, including books and records (other than: (i) minute books and records of directors' and shareholders' meetings and other documents relating to Seller's corporate existence; (ii) records of Seller such as general ledgers, and (iii) Seller's tax returns), customer lists, dealer and distributor lists, credit information and correspondence, proprietary data, all designs and drawings, patterns, slogans, copyrights, processes, formulae, know-how, trade secrets, processes, inventions and discoveries (whether patentable or not) manuals, computer software, data stored in computers, contract rights, warranties or other transferable benefits that Seller may have received from manufacturers or suppliers as to any of the Purchased Assets and other similar intangible property and rights (including goodwill) (all of the foregoing hereinafter collectively called the "Purchased Rights"). Seller shall retain the right to examine such books and records transferred to the Purchaser, or to make extracts or copies therefrom, for a period of six years after the date hereof, or until such time as all tax matters relating to Seller's tax year 1997 and prior years have been resolved, whichever shall last occur, during reasonable business hours, and during such other times as the Purchaser and Seller may agree, and to remove such books and records in connection with any proceedings, claims or actions which may be brought against Seller, in any judicial or formal or informal administrative proceeding or before any arbitration tribunal. Purchaser shall have the right to inspect and copy such books and records that are not included in the Purchased Rights during reasonable business hours for a period of six years after the Closing Date.


Section 1.8. Purchased Intellectual Property.


All trademarks, trade names, applications to register trademarks or trade names, licenses, patents, patent applications, copyrights and copyright applications, and other similar rights used in the Business, including, without limitation, those listed in Schedule 1.8 attached hereto (hereinafter collectively called the "Purchased Intellectual Property") and all rights to sue for infringement or other violations of the Purchased Rights or the Purchased Intellectual Property.


Section 1.9. Excluded Assets.


Notwithstanding the provisions of Sections 1.1 through 1.8, the parties agree that the Purchased Assets shall not include Seller's corporate existence, minute book, stock record book and corporate seal, any rights of Seller under this Agreement, the Management Agreement, and any agreements between Seller and A.R. Baron & Co., Inc. ("AR Baron").


ARTICLE II


Section 2. Purchase Price and Payment.


Section 2.1. Purchase Price The aggregate purchase price of the Purchased Assets (the "Purchase Price") shall be the sum of: (a) One Million Five Hundred Forty-Four Thousand Four Hundred Thirty-Eight (1,544,438) shares of common stock of Access, $.01 par value per share (the "Access Purchase Shares"), plus an equivalent number of Purchaser's Class B Warrants ("Access Purchase Warrants") (collectively, the Access Purchase Shares and Access Purchase Warrants are sometimes hereinafter referred to as the "Access Purchase Securities"), plus the amount of the Cash Adjustment and the Share Adjustment calculated pursuant to Section 2.2 (the "Share Portion of the Purchase Price"), plus (b) the amount of the "Assumed Liabilities" (as hereinafter defined) assumed by Purchaser hereunder.


Section 2.2. Adjustment to Purchase Price. Seller has issued Convertible Promissory Notes dated December 19, 1996, in the aggregate principal amount of $129,690.74 ("Seller Convertible Notes"). Prior to the Closing, at Access' request, Seller shall issue notices to the holders of the Seller Convertible Notes that the Seller Convertible Notes will be prepaid unless the holder elects to convert its Seller Convertible Note into shares of Seller common stock. At the Closing, Access shall deliver sufficient cash to satisfy Seller's obligation to pay such Seller Convertible Notes (the "Cash Adjustment") and will deliver to Seller one (1) Access Purchase Share and Access Purchase Warrant for each five (5) share(s) of PaperClip common stock issued to former holders of Seller Convertible Notes who elect to so convert (the "Share Adjustment").


Section 2.3. Payment of Share Portion of Purchase Price.


At the Closing (as defined in Section 3 below), the Purchaser shall deliver to or for the account of Seller the Access Purchase Securities, plus the Share Adjustment and the Cash Adjustment.


Section 2.4. Allocation of Purchase Price. The Purchase Price shall be allocated to the Purchased Assets in accordance with the values to be jointly agreed upon prior to the Closing. Purchaser and Seller shall jointly prepare Form 8594 pursuant to Section 1060 of the Internal Revenue Code of 1986, as amended, on a basis consistent with such allocations, and none of the parties hereto shall take any position with any governmental or regulatory authority inconsistent therewith.


Section 2.5. Adjustment of Shares. If Access effects any change in its outstanding common stock by reason of stock dividends, stock splits or recapitalization between the date of this Agreement and the Closing Date without receipt of consideration, then the aggregate number of Access Purchase Securities shall be appropriately adjusted.


ARTICLE III


Section 3. Closing.


The closing of the transactions contemplated hereby (the "Closing") shall take place at the offices of Edwards & Angell, 2700 Hospital Trust Tower, Providence, Rhode Island at 10:00 a.m. on a date to be specified by the parties which (subject to the prior satisfaction or waiver of the conditions set forth in Sections 9 and 10) shall be no later than the fifth business day after the day on which the conditions in Sections 9.2 (first clause), 9.7, 9.10, 9.11, 10.6 and 10.9 have been satisfied, or at such other time and place as the parties hereto shall agree in writing. The date on which the Closing occurs is hereinafter referred to as the "Closing Date". The transactions contemplated hereby (except for the payments and actual transfer of the Purchased Assets) shall be deemed to have been consummated as of the close of business on the "Closing Date" for all tax, payroll, bonus, utility, expense, earnings, pension, income, liability, billing, operating and accounting and all other purposes relating to the acquisition of the Purchased Assets by the Purchaser. At the Closing, Seller will deliver to Purchaser such bills of sale, endorsements, assignments, or other instruments in form and substance satisfactory to Purchaser and its counsel, as may be necessary to vest in Purchaser good and marketable title to the Purchased Assets sold to the Purchaser hereunder, subject to no liens, encumbrances or security interests except as are listed on Schedule 6.9 hereto ("Permitted Liens").


ARTICLE IV


Section 4. Assumption of Liabilities; Indemnification.


Section 4.1. Assumption by Purchaser.


The Purchaser shall, by appropriate instruments to be executed and delivered at the Closing, assume and agree to perform, pay or discharge, to the extent not theretofore performed, paid or discharged, Seller's liabilities, obligations, debts, contracts or other commitments of any kind whatsoever, known or unknown, fixed or contingent, as the same shall exist on the Closing Date (hereinafter collectively called the "Assumed Liabilities"); provided, however, that it is expressly agreed that the Assumed Liabilities shall not include, and Purchaser shall not be obligated to assume or become liable for, any of Seller's liabilities or obligations, known or unknown, fixed or contingent, now existing or hereafter arising, which shall arise out of or relate to: (i) any liability or obligation of Seller to Discovery Laboratories, Inc. ("Discovery") arising out of any agreement between Discovery and Seller or out of any transactions contemplated by that certain letter of intent dated February 21, 1997, between Discovery and Seller ("Discovery Letter of Intent"); (ii) any liability or obligation of Seller to AR Baron arising out of any agreement between AR Baron and Seller; (iii) any liability or obligation of Seller under Seller's stock options, warrants, agreements to issue stock options and warrants, and any other securities or instruments convertible into securities except for the Seller Convertible Notes; or (iv) any agreement designated on Schedule 6.8 (a) as not being assumed by Access.


Section 4.2 Indemnification by Seller.


Seller hereby agrees to indemnify, defend and hold harmless Purchaser and its officers, directors and stockholders from, and will pay to Purchaser and such persons the amount of any losses, liabilities, claims, demands, judgments, damages, expenses and costs (including, without limitation, reasonable counsel fees) whether or not involving a third party claim, arising, directly or indirectly, from or in connection with Seller's failure to pay, discharge or perform any of its liabilities or obligations that are not assumed by Access under this Agreement.


Section 4.3. Indemnification by Purchaser.


Purchaser hereby agrees to indemnify, defend and hold harmless Seller, and its officers, directors and stockholders from and will pay to Seller and such persons the amount of any losses, liabilities, claims, demands, judgments, damages, expenses and costs (including, without limitation, reasonable counsel fees), whether or not involving a third party claim, arising, directly or indirectly, from or in connection with Purchaser's failure to pay, discharge or perform any Assumed Liability.


Section 4.4 Limitations on Indemnity.


Notwithstanding anything contained in this Agreement to the contrary:


(a) If the Closing occurs, neither Seller nor Purchaser shall have any
liability for indemnification with respect to any representation or
warranty made prior to the Closing Date or any covenant to be performed
prior to the Closing Date.


(b) The amount of any claim for indemnification shall be limited to
the actual out-of-pocket expenses incurred by the indemnitee after taking
into account tax benefits actually realized in the current fiscal year.


Section 4.5. Indemnification Proceedings.


Each party entitled to indemnification pursuant to this Article IV (the "indemnified party") shall give notice to the pa ...